The latest study conducted to assess the insurance industry reveals that the gap between increasing insurance costs and wage hikes has been widening in most states. Vice President Joe Biden addressed the National Association of Insurance Commissioners yesterday to tackle the issue of insurance rate reviews, a practice that would give insurance commissioners across the U.S. additional power to control hikes in premiums.
According to a report prepared by the National Economic Council, policyholders in the state of Alaska and Florida have seen the biggest difference between insurance rate hikes and wage increases. Even analyst from the Alaska auto insurance industry say that in recent years, there has been a growing concern that rising insurance costs may be driving away potential policyholders because of the widening gap between insurance costs and salaries.
In Alaska, for instance, the report found that while insurance providers have increased their rates by an average of 145 percent in the last 10 years, wages have only climbed a measly 35 percent. Florida fares a bit better with the average insurance rate increase standing at 121 percent, although salaries have only increased 43 percent. Of the 50 states, Michigan posted the smallest premiums-wage hike gap at 37 percent.
The Vice President also pointed out that everywhere across the nation, the gap is widening and is threatening to make insurance even more expensive for Americans already struggling with their finances. Biden is also expected to express his support for the strengthening of existing rate review policies in states that mandate them.
Some states like California have had the foresight to implement sweeping changes to their insurance industry and policies governing auto insurance and the like. In California, providers have to seek the approval of an elected Insurance Commissioner before pushing through with plans to increase premiums. Government regulators have long sought the inclusion of rate review policies in all the states especially with car insurance premiums expected to increase in the near future. Industry sources say that providers are mulling plans to raise insurance rates in the face of rising medical costs. The presence of uninsured drivers on the road is also forcing many insurers to increase premiums to cover their policyholders.
Analysts say that while the plan for mandatory rate reviews is not “a silver bullet,” it is expected that major changes in the insurance market can lead to better negotiating powers with insurance providers, eventually resulting in lower premiums or more acceptable rate hikes.